It is common in the investing world to hear a version of the following:
The best time to plant a tree was 30 years ago, and the second-best time to plant a tree is now.
Although attribution for this has been given as a Chinese proverb, it is not clear as to its actual origin. Another profound version demonstrating the long-term approach required to grow a large tree apparently appeared in “The Pall Mall Gazette” of London in 1868.
“Blessed is he who plants trees under whose shade he will never sit.”
I use the analogy of planting seeds because it is personal to me. As a curious 5-year-old boy, I discovered that maple tree seeds – helicopters in our youthful vernacular – could be planted to grow a maple tree. I acted as any rightly constructed midwestern boy would and planted such a seed in my mother’s flower bed. I did this with no expectation of what it might be 50 plus years in the future. I planted it for fun. I did something. I gave it the opportunity to grow. And it did grow.
How fast it actually grew is a memory that I have lost. I remember a year or two later, that my older brother was required to transplant it from the flower bed to a more suitable location in the yard. I can remember that it was head high to me and was not an easy task for my teenage brother as the main root was much longer than expected already. Transplantation was successful and it flourished a few yards off our back porch.
As a teenager myself, I would brag, “I planted that tree from a seed and it’s nearly big enough for me to climb.” I few years later, I left. I went to college, and graduate school. Then I landed a job in Colorado. The tree, however, did not require my attention. It continued to grow.
It now towers over my boyhood home. As evidenced in this photo from 2013.
I visited again this summer (2022) after another decade of growth, and it is now massive. That, as it turns out, was the benefit provided by neglecting it over the passage to time. More than five decades of adequate rain, soil and sunshine produced a tree well beyond the imagination of the seed planter.
“Tom’s Maple Tree” as it is referred to in my family, is an inspiration for me. Financial seeds planted for fun, as a means to take action, can also grow. No one was impressed when the first signs of plant life emerged from the soil from that maple seed. Likewise, I didn’t get too excited when I saw my first 401(k) deposit of less than $100 or my first few cents (yes, less than a dollar!) of interest earned from my real estate loans.
The results from that 401(k) account and the levels of monthly interest from private real estate lending have also grown with the passage of time. I wouldn’t describe them as massive, but it also hasn’t been quite as long as it has for my tree. Neglecting a 401(k) account is one of the secrets of the success of retirement accounts. The owner is not busy trading haphazardly, but by making consistent contributions over time, allowing true “income averaging” to have the desired effect.
The takeaway is not that it takes a long time for money to grow. I think the takeaway is that if you want the opportunity for some money to grow, for your wealth to increase, you must plant the seed. In fact, take advantage of the second-best time to do so – plant it now.
Enjoyed